Today forward-thinking food and beverage manufacturers leverage machine learning technology (ML) to aid their demand planning processes. Machine learning supports manufacturing processes at every stage, decreasing expenses, reducing waste and improving quality. But how do demand planning and machine learning intersect? 

Demand Planning — What is it? And Why Do We Need it?

Demand planning is all about creating forecasts that predict the future demand for your products. Effective demand planning leads to numerous important benefits, including: reduction in stockout, lower costs of inventory, the opportunity to negotiate improved pricing with suppliers and and reduction in waste.  If food and beverage manufacturers fail to accurately predict future demand, they’re likely to struggle in what is a highly competitive marketplace. They’ll waste their valuable resources, and if they fail to meet demand, they may lose credibility, and customer confidence will wain.

Retailers lose more than $1 trillion globally each year as a result of overstock or out of stock situations, so you cannot underestimate the importance of demand planning. 

Machine Learning and Demand Planning

Machine Learning is a subset of Artificial Intelligence (AI), and it offers many exciting possibilities to optimise and automate the demand planning process for food and beverage manufacturers. Thereby saving costs and reducing waste. Many food and beverage manufacturers have recognised that machine learning can have a transformational impact on their operations. Machine learning can leverage data from across the whole supply chain, and use high performance algorithms to deliver accurate models and predictions of future demand. 

Machine Learning’s data sources are particularly useful tools when demand planning.  Built upon statistical models, ML utilizes additional internal and external sources of information to deliver the most accurate, data-driven demand predictions possible. ML engines can work with both structured and unstructured data, including past financial and sales reports, social media signals, weather forecasts and macroeconomic fluctuations. What results is the most accurate, trustworthy prediction of demand that’s available.

Apart from analyzing huge data sets, demand planning software, powered by ML, continuously retrains models, adapting them to changing conditions, such as the impact of the COVID-19 pandemic. Machine Learning also has implications for demand planning in the restaurant business. ML algorithms can help predict visitor traffic on different seasons and events, for example.

Some Final Thoughts

Between 2019-2024 the Food and Beverage market is expected to register a CAGR of over 65.3%. The leaders of the industry are choosing to invest in innovative digital technologies which set them apart from the competition. And with accurate demand planning and demand forecasting being more vital than ever before, it’s Machine Learning solutions that will lead the way. 

Looking to the future, leading food and beverage manufacturers are using purpose-built demand planning solutions to process large data sets using machine learning algorithms. If you want to gain a stronger grip on the demand planning side of your enterprise, get in touch with Cashmere today. Our inventory and order management software, purchasing software, demand planning software, and advanced ERP solutions are powered by AI and serve leading F&B clients around the world.